How Will Asia See It?

T-Notes tight early on in Asia trade, -0-02 at 138-29, holding around the late Thursday lows.

• The curve ultimately ran steeper on Thursday, with the initial reaction to the Fed's new flexible average inflation targeting regime seeing a bid, before a violent snapback as the space cheapened. If we look to the actual wording of Fed Chair Powell's address, he left himself plenty of wiggle room, noting that "we will seek to achieve inflation that averages 2 percent over time. Therefore, following periods when inflation has been running below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time." He went on to highlight that the Fed's focus on the label market will look to "assessments of the shortfalls of employment from its maximum level" rather than "deviations from its maximum level". Summing these 2 parts results in the definition of running the economy hot.
• Local data had a limited impact on the space given the focus on Fed Chair Powell.
• Elsewhere, the short end was pressured on the back of news that Vanguard will transition its $125.3bn Prime Money Market Fund to a government money market fund.
• Little of note on the docket in Asia, with regional reaction to Thursday's developments eyed.